M10-Communication With Management and Those Charged With Governance Flashcards
When evaluating whether a control deficiency is a significant deficiency or a material weakness, the auditor should consider both the likelihood and magnitude of any potential misstatement. (true or false)
true
Any report issued on significant deficiencies should indicate that the purpose of the audit was to report on the financial statements and not to provide assurance on internal control. (true or false)
true
A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected/corrected. (true or false)
true
A previously communicated significant deficiency that has not been corrected ordinarily should be communicated again in writing, during the current audit. (true or false)
true
A material weakness is a significant deficiency that results in a reasonable likelihood that a material misstatement in the financial statements will not be prevented or detected/corrected. Not all significant deficiencies will be material weaknesses. (true or false)
true
The auditor should communicate the initial selection of, and changes in, significant accounting policies to those charged with governance. (true or false)
true
The auditor is required to communicate to those charged with governance regarding certain matters, including management consultation with other auditors. Consequently, the auditor must ask management about this matter. (true or false)
true
The auditor’s consideration of materiality is a matter of professional judgment and is influenced by the auditor’s perception of the needs of a reasonable person who will rely on the financial statements. Materiality assessments are not typically discussed with those charged with governance. (true or false)
true
Disagreements based upon preliminary information need not be communicated by the auditor to those charged with governance. (true or false)
true
Communications regarding independence must be made in writing prior to accepting the engagement. (true or false)
true
The auditor’s communication with those charged with governance should be two-way: those charged with governance should also communicate relevant matters to the auditor. (true or false)
true
According to the SEC, members of an issuer’s audit committee may not accept any consulting, advisory, or other compensatory fee from the registrant for services other than as a member of the board. (true or false)
true
